Opening Belle

September 09, 2020 • Estimated Reading Time: 6 minutes

DB's comments;Not a lot relevant for me today. Waiting for the main event tomorrow.  Brexit "developments" are worth monitoring. GBP has taken a decent hit on these headline trades. There's no real substance to the reports. They seem to be coming thick and fast and although they might not mean anything, the market could easily whipsaw people out of positions. Any confirmation of commitment to the WA by the UK government could set up a nice reversal trade. Likewise, an official confirmation of the below could see some further downside for the pound.  

 Sources confirm FT reports that top lawyer, Jonathan Jones was unhappy about how far govt plans to push against Withdrawal agreement in legislation being published tomorrow— Laura Kuenssberg (@bbclaurak) September 8, 2020 

Overall risk sentiment will have a bearing too.

No point being long the pound if another bout of "risk off" is hitting the market.

Risk sentiment and overnight markets

Asian markets are a sea of red, taking lead from yesterday's U.S. selloff.

However, there are some green shoots.

Asian markets are off the lows. Oil seems to have calmed, with Brent now just above $38.50 & Crude above $36.50.  Nasdaq futures are up over 1.2% on the day, the S&P is 0.5% to the good. European futures are set to open flat, maybe even slightly in the green...  

 Markets bouncing after early slip on AstraZeneca news.

European Opening Calls:#FTSE 5912 -0.32%#DAX 12971 +0.02%#CAC 4973 -0.01%#AEX 540 -0.10%#MIB 19410 +0.16%#IBEX 6963 +0.11%#OMX 1778 -0.27%#STOXX 3268 +0.03%#IGOpeningCall— IGSquawk (@IGSquawk) September 9, 2020 

China's CPI & PPI

China’s factory gate prices fell for the seventh straight month in August but at the slowest annual pace since March, suggesting the industries of the world’s No. 2 economy continued to recover from the sharp coronavirus-induced downturn.

The producer price index (PPI) eased 2.0% from a year earlier in August, the National Bureau of Statistics (NBS) said on Wednesday. That was in line with expectations in a Reuters poll, but the decline was more modest than the 2.4% fall in July.

The consumer price index meanwhile rose 2.4% last month from a year earlier, as expected, slower than a 2.7% annual increase in July.

Here are the full details;

Australia's consumer sentiment gauge for September improved. After collapsing last month, the index rebounded by 18% (from a low base).  Obviously this means the report is titled;"Consumer sentiment roars back despite news of recession"

Here's the summary.

The expectations for house prices and economic conditions stand out.

I'll post the full report in the discord this morning. Some Brexit news via Newsquawk 

 - Senior UK Sky News sources believe UK Chief Brexit Negotiator Frost has concluded that a deal with the EU is not achievable without fundamentally compromising UK red lines— Newsquawk (@Newsquawk) September 9, 2020 

Vaccine Glitch (BBG)

AstraZeneca’s U.S.-traded shares declined sharply Tuesday following a report that a study of the British drugmaker’s Covid-19 vaccine had been put on hold.

In late trading in New York, shares of AstraZeneca fell as much as 8.3% after STAT reported that the company had paused its coronavirus vaccine trial due to a suspected adverse reaction in a trial participant in the U.K.

The nature of the hold wasn’t clear and it’s possible it could be minor, according to the report. 

AstraZeneca’s vaccine, which it is developing with researchers from the University of Oxford, has been viewed as one of the leading candidates to reach the market.

On the calendar...

Not too much to get excited about.The main event is the BoC decision. They're expected to remain on hold, and potentially follow the Fed into AIT territory. This was strongly hinted in the post-meeting comments in July.    Reuters have a preview here

  • Redbook figures will give us the latest from the largest U.S. retailers.

  • $35 billion of US 10Y treasury bonds will be auctioned at 6PM.